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The fate of over 5,000 containers carrying Indian cargo remains uncertain, with South Korean shipping line Hanjin applying for US bankruptcy protection, said industry sources.
The world’s ninth largest shipping company sought US bankruptcy protection on August 31. Many ports have refused to handle its cargo and ships; in one instance a terminal in India declined to berth a Hanjin vessel, said sources.
Around 50 containers with cargo of a garment exporter in Karur is stuck at a transshipment port. Manufacturers in many industries, including electronic and tyre and seafood exporters, with both in bound and outbound cargo stranded at various ports globally, are facing a similar predicament, the sources added.
K Ravichandran, Senior Vice-President, ICRA, who tracks the shipping sector, said Hanjin’s bankruptcy filing will have a temporary disrupting influence on Indian trade, as Hanjin had regular service at almost all Indian container handling ports such as JNPT, Mundra, Chennai, Pipavav, Kochi, Tuticorin, Vizag and Kolkata.
Retrieving cargo from stranded ships at various container ports globally will be a challenge as ships have been arrested by authorities. Moreover, they may have to pay higher container freight charges with other liners as rates have risen sharply due to the vacuum created by the Hanjin. But the disruption will be only temporary as there is excess capacity in the container liner industry. Eventually the freight rates will soften in two-three months as the idle ships come back to trade, he said.
Hanjin Shipping operates about 70 liner and tramp services around the globe transporting over 100 million tonne of cargo annually. Its fleet consists of over 150 container ships and bulk carriers.
B Govindarajan, Chief Operating Officer, Tirwin Management Services (P) Ltd, a Chennai-based consultancy firm, said freight forwarders who have put their customers’ cargo on Hanjin ships may face greater challenges. Freight forwarders who have issued their House Bill of Lading may be left in the lurch unless they are suitably covered by insurance that provides protection for shipping lines suspending operations.
Unlike air transport where goods are transferred under Cargo Trade Manifest and carried by other airlines on a pro-rata basis, shipping lines do not follow such a practice of transferring goods to another ships for further carriage. Even if freight forwarders decide to arrange an alternative carrier, the issue of de-stuffing and re-stuffing containers on high seas and associated costs would certainly put them on a back foot, he said.
A steep increase in rates will challenge freight forwarders who have contractual rate commitment with their clients, as the freight rates are likely to go up, he said.
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